P&G is a Multinational American consumer goods corporation was established in 1837 by James Gamble and William Procter.
The Company operates through five segments: Beauty, Grooming, Health Care, Fabric & Home Care and Baby, Feminine & Family Care.
The company's total number of brands is 57 after streamlining portfolio of the company in 2014 , selling and dropping off over 100 brands from its product portfolio.
The Company operates in 180 countries through distributors, Modern retail, specialty, e -commerce and Neighbourhood stores .
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“ Strategic Plan – Procter and Gamble Case study ”
Our global operations are centered around a strategy called All in to Win, an exceptional consumer experience. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, business partners and the communities in which we live and work to prosper.
Mission Statement (Recommendation) Cont.
The original mission statements highlights the What and why of the company's purpose. The what is the product development strategy emphasizing value and quality.
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The Why is the emphasis on leadership sales, profit and value creation for stakeholders.
However, it doesn't articulate the how, the technology or strategy to win. Also, the statement fails to capture the customer (business partner) rather than the consumer as an important stakeholder in the value matrix.
Integrity
Value Statement
Leadership
Ownership Trust
Passion for Winning
Fiscal year is July 2017 - June 2018.
High level of efficiency and profitability
Key 2018 Headline Data at a Glance
Revenue US$66.83 billion
Cost of Goods Sold US$33.45 billion
Net Income US$9.75 billion
Number of Employees 95,000
52 Week Share price Range 75.39 - 108.68
Revenue per Employee $726,435
Income per Employee $105,978
Fiscal year is July - June.
2014 2015 2016 2017 2018 Comments
Sales/Revenue 80.51B 70.75B 65.3B 65.06B 66.83B
Revenue grew due to P&G's focus on developing new territories Sales Growth - -12.12% -7.70% -0.37% 2.73%
Cost of Goods Sold (COGS) 40.61B 36.44B 32.19B 31.94B 33.45B
COGS Growth - -10.27% -11.67% -0.77% 4.72%
Gross Income 39.9B 34.31B 33.11B 33.12B 33.38B
49.95% is a very healthy gross margin growth
Gross Income Growth - -14.02% -3.49% 0.02% 0.81%
Gross Profit Margin - - - - 49.95%
Net Income 11.2B 8.19B 9.93B 10.11B 9.75B
14.59% is a very healthy net margin growth
Net Income Growth - -26.86% 21.27% 1.79% -3.55%
Net Margin Growth - - - - 14.59%
Key Financial trends
All values in USD
The intensity of Rival
The rival intensity in this industry is very high.
P&G has several strong competition like Unilever, Colgate - Palmolive, Kimberly Clark, Johnson and Johnson, Bic and Reckitt
Benckiser.
Major competitors
Global Markets and Competition
P&G gets over 65 % of its total revenue from developed markets. In contrast, rival Unilever reports over 57 % of its revenue coming from
developing markets and 42 % from established markets. P & G's concentration in s low -growth markets is the company's most significant problem.
SWOT Analysis
Threats
Local and competition
Counterfeiting of products
Trade barriers in some countries
Recession
Consumer price sensitivity
Increase in cost of raw materials
Opportunities
Mergers and acquisition
Business diversification
Rural market expansion
Product innovation
Further expand developed markets
Expand supply chain network
Strengths
Strong consumer goods brands
Economies of scale
Efficient product distribution network
Excellent R&D
Economies of Scale
High gross profit margin
Weakness
Loss due to closure of brands
Imitable products
Organization slow decision making
Over reliance on establi sed countries
Low organic growth
Changing market dynamics
P&G's Competitive Position
Porter's Five Forces Analysis Model
Competitive Rivalry - High
P&G operates in a highly competitive market
High threat of competition with local and regional competitor
P&G has several strong competition like Unilever, Colgate -
Palmolive, Kimberly Clark, Johnson and Johnson, Bic and Reckitt Benckiser.
Little brand loyalty amongst customers in the industry
Competition affects generally the long term profitability of P&G.
Threat of Substitution - High
There are significant numbers of substitutes of all P&G's products .
In order to distinguish itself, P &G must continually provide innovative, cutting -edge and new products and branding to the customer .
Make price adjustment strategies according to the conditions of the economy especially developing nations with a lot of pricesen sitivity .
Supplier's Bargaining Power - Low
Suppliers of materials need key customers like P&G for profitable revenue generation and will very likely have little bargaining power because of its small size .
There are a large number of suppliers in the market for all these suppliers .
The supplier switching cost is low for P&G .
P&G can use its large amounts of available cash and huge size
to its advantage during this current credit crisis .
Buyer's Bargaining Power - Moderate
Large sales of P&G sales depends upon retailers like Walmart .
Over reliance on few retailers decreases the bargaining power of P&G . Retailers want high profit margin and could impose unfavorable terms of the company.
Buyers switching cost is almost zero because of large numbers of substitute is available.
Threat of New Entrants - Low to Moderate
P&G have low threats from entrants due to the huge capital investment to enter the market.
P&G already has established relationship with retailers which give them advantage to acquire good shelf space.
P&G possess a huge portfolio of products and important amount of market share in the world .
P&G's Industry
Procter & Gamble has become one of the biggest company's in the global Fast moving consumer goods (FMC G ) industry with a prominent market position.
This success is partially driven by the company's effectiveness in addressing external environment factors that affects the business.
However, macro -environment is dynamic. This dynamism presents new challenges against P&G's operations. A PESTLE analysis of P&G helps identify these challenges and provides basis for new strategies for the consumer packaged goods business.
P&G's performance in the consumer goods industry is directly based on the economies where the business operates.
The following economic external factors are most notable for P&G:
Type and stability of economic system in country of operation
Exchange rates & stability of host country currency.
Financial markets efficiency
Does P&G need to raise capital in local market?
Business cycle stage (e.g. prosperity, recession, recovery)
Economic growth rate
Disposable income levels
Unemployment rate
Inflation rate
Interest rates
Economic Factors
P&G depends on technologies to support its consumer goods business. Also, technological progressions influences consumers' purchases decisions.
Technological analysis involves considerating the following impacts -
Technology's influence on product offering
Power on cost structure
Impact on value chain structure in FMCG sector
Degree of technological diffusion
Technology maturity
Recent technological advancements by competitors
Technological Factors
P&G's strategies comprise of processes to ensure legal compliance of its business. The external influence of rules and regulations on companies are assessed in this element of the PESTLE analysis structure.
The below legal external influences shape the policies of P&G:
Anti -trust law in FMCG industry and overall in the country.
Intellectual property law
Consumer protection
Employment law
Safety and health law
Data Protection
Business sustainability regulations
Environmental protection regulations
Legal Factors
The situation of the natural environment influences how P&G satisfies its business objectives.
Ecological external factors involves understanding the following impacts -
Weather
Climate change
Laws regulating environment toxic waste
Recycling
Waste management
Attitudes toward "green" or ecological products
Attitudes towards renewable energy
Environmental Factors
Productivity provides fuel for invention and investment to fast -track and maintain top - and bottom -line growth.
Delivering productivity to fuel investments
Productivity across the supply chain
Productivity by reinventing marketing
References
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Dockalikova , I., & Klozikova , J. (2014 , October) . MCDM Procedures in Practice : Determining the Significance of PESTLE Analysis Measures . In European Conference on Management, Leadership & Governance (p . 418 ). Academic Conferences International Limited.
Glazer, R . (1999 ). Competitive Advantage Through Information - Intensive Strategies . Handbook of Services Marketing and Management, 409.
Housing Industry Association (2011 ). An Introduction to PESTLE Analysis . HIA Ltd.
Merchant, H . (2014 ). Configurations of governance structure, generic strategy, and firm size. Global Strategy Journal, 4 (4 ), 292 -309.
Mockler , Dr . Robert J. (2007 ). Case 27 . Proctor & Gamble : The Beauty/Feminine Care Segment of the Consumer Goods Industry .
Murphey, M ., & Gause , R . (1974 ). UCF Research Guides . Industry Analysis . PESTLE Analysis . Business Horizons , 17 (5 ), 27 -38.
Parnell, J. A . (1997 ). New evidence in the generic strategy and business performance debate: A research note. British Journal of Management , 8 (2 ), 175 -181.
Spry, A ., & Lukas, B . A . (2016). Brand Portfolio Architecture and Firm Performance : The Moderating Impact of Generic Strategy. In Looking Forward, Looking Back : Drawing on the Past to Shape the Future of Marketing (pp . 866 -867 ). Springer International Publishing.
The Procter & Gamble Company - Who We Are.
The Procter & Gamble Company, Form 10 -K .
Varadarajan , P., & Dillon, W . R . (1982 ). Intensive growth strategies: A closer examination. Journal of Business Research , 10 (4 ), 503 -522.
Y?ksel , I. (2012 ). Developing a multi -criteria decision making model for PESTEL analysis. International Journal of Business and Management , 7 (24 ), 52.
Updated: May 19, 2021
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